by David Koenig, Associated Press
Boeing will pay $2.5 billion to settle a criminal charge of defrauding safety regulators in connection with the development of the 737 Max aircraft, which suffered two deadly crashes.
The Justice Department said Jan. 7 that Boeing agreed to the settlement that includes money for the crash victims’ families, airline customers and airlines, as well as a fine.
David L. Calhoun, Boeing President and Chief Executive Officer, said in a note to employees: “I firmly believe that entering into this resolution is the right thing for us to do a step that appropriately acknowledges how we fell short of our values and expectations,” said David L. Calhoun, Boeing president and CEO, in a note to employees. “This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations.”
Boeing announced that the agreement was accompanied by an 8-K filing with the Securities and Exchange Commission, which reflected that the company had taken a $743.6 million charge to earnings in connection with its commitments under the agreement.
The 737 Max entered service in 2017. On Oct. 29, 2018, a Max operated by Indonesia’s Lion Air plunged into the Java Sea. The Federal Aviation Administration let the Max keep flying, and on March 10, 2019, another Max operated by Ethiopian Airlines crashed nearly straight down into a field.
In both crashes, everybody on board was killed 346 people in all.
Since then, Boeing has redesigned an automated flight-control system that pushed the noses of both planes down, in each case based on a faulty reading from one sensor. Boeing changed the system so that it always uses two sensors, along with other changes to make the automated system less powerful and easier for pilots to override.
In November, the FAA approved Boeing’s changes, and several carriers including American Airlines have resumed using the planes.